Thursday, May 28, 2009
Forex Position Trading
Position Trading
There are basically 3 major ways that a forex player can use to play in the forex market. A very stable way of trading is position trading. Have you ever heard of some forex traders holding on to trades for days, weeks or even months? Well, these people are position trading and they are not looking for a basic win of 10 to 20 pips. They are looking to win hundreds or even until a thousand plus pips!
Position trading is when a trader opens a trade and closes the trade a very long time after the trade is open. Why? You may be curious. Most of the time, these people want to go big. They zoom out on their forex charts to look at the daily or even weekly charts to have a look at the biggest mountain or valley and they want to capture profits from the biggest trend.
Advantages of Position Trading
Compared to other trading styles, position trading is the least risky. There is always something called random noise in the forex market. Random noise occurs when things do not go as planned on certain days and the market may go against the trend for a while. But when doing position trading, a trader focuses on the biggest trend, having very big stop-losses. This, therefore, makes them immune to the random noise and thus, eliminates a lot of risk.
Position trading also eliminates a lot of analytical daily work required for day trading and scalping. Some position traders check their charts only a few times a week!
Disadvantages of Position Trading
Well, position trading is not for the impatient. Some people like to see results, and they like to see results fast. Position trading can sometimes become boring for these people and therefore, they think it is not for them.
But for me, I believe position trading gives a trader a lot of freedom, and the boredom is a small price to pay for being able to not glue myself to the computer to do daily analysis or scalping.
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